- Italy's harmonised inflation falls
- ECB expected to take deposit rates negative
- US factory orders to be released
FTSE 100: -0.43%
CAC 40: -0.33%
FTSE MIB: -0.43%
IBEX 35: -0.18%
Stoxx 600: -0.53%
European stocks slid as Italy's harmonised inflation weakened modestly in January, in line with economists' expectations.
The harmonised index of consumer prices (HICP), measured under the European Union methodology, rose 0.6% on an annual basis in January, after recording a 0.7% gain in December, preliminary estimates from statistical office Istat showed.
Month-on-month, HICP decreased by 2.1% in January, meeting forecasts. Prices were dragged down by food, alcohol and tobacco.
"The HICP breakdown released by Istat (see detailed tables below) shows that, similar to the euro area, the fall in the headline inflation rate was mainly related to volatile components," Barclays said.
Separately, Credit Suisse said it expects euro-area inflation to fall further, prompting the European Central Bank (ECB) to take the deposit rate marginally into negative territory and a cut in its main policy rate in March or April.
With inflation currently at 0.7%, well below the ECB's 2% target, Credit Suisse said the monetary authority in unlikely to remain idle.
However, the analyst said bringing the decision to this Thursday's ECB policy meeting is a risk.
"We expect headline and core to hit a new low in March at 0.4% year-on-year. 2014 inflation is likely to be well below the ECB December staff projections, and prospects for the medium term have also weakened in our view," the broker said.
Later on in the US, is the release of a report on factory orders which is expected to show a 1.8% fall in December, compared to a 1.8% rise the previous month.
Federal Reserve officials Charles Evans and Jeffrey Lacker will speak later, potentially offering some clues on the US central bank's next policy move after announcing a second round of stimulus tapering of $10bn to $65bn.
BP, Premier Oil
BP slumped as the oil giant said fourth-quarter profit fell to $2.8bn from $3.9bn a year earlier.
Premier Oil was up after Simon Lockett said he will step down as Chief Executive.
ARM Holdings tumbled after the chipmaker reported a drop in fourth quarter profit, reflecting an impairment charge.
BG Group edged lower after the UK natural gas producer posted a quarterly loss as Egyptian exports were disrupted and costs rose.
UBS and Munich Re advanced after they both posted quarterly earnings that beat analysts' expectations.
Vestas Wind Systems declined after saying it seeks to raise capital.
The euro fell 0.11% to $1.3510.
Brent crude futures dipped $0.417 to $105.600 per barrel, according to the ICE.